FEAR & GREED | Business News Q+A: Three things we learnt from earnings season
Sep 1, 2025
Roger Montgomery, Founder and Chief Investment Officer at Montgomery Investment Management, shares his insights on the recent earnings season marked by significant volatility. He discusses three key takeaways, including a notable shift towards economic recovery and the improving consumer spending that boosted discretionary stocks. Montgomery highlights the emerging trend favoring small-cap stocks over large-cap ones, along with the challenges faced by major retailers. His advice for retail investors emphasizes the importance of focusing on long-term fundamentals rather than short-term market swings.
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Volatility Fueled By Passive Flows And Stale Estimates
- Record-high share price volatility was amplified by passive investing and quantitative trading.
- Stale earnings estimates and lack of updated guidance widened price moves on earnings surprises.
Early Signs Of Consumer-Led Recovery
- The economy looks to be shifting from resilience toward early signs of recovery driven by easier financial conditions.
- Consumer discretionary sales rebounded with retailers like JB Hi‑Fi and Nick Scali reporting strong starts to FY26.
Analyst Revisions Tilt Negative
- Earnings revisions showed a slight downward tilt with more downgrades than upgrades in aggregate.
- Median company estimates fell about 0.4% while average downgrades were larger than upgrades.